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TMI Blog1986 (7) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... e wound up. In pursuance of that order, the official liquidator took charge of all the property and effects of the company. However, so far as the godown was concerned, he did nothing in the matter. Nor was anything done by the bank. The pledged goods lying in the godown, when the winding up order was made, continued to lie there. About six years afterwards, on February 26, 1983, the landlord moved this present application under section 535 of the Companies Act, 1956. He sought two reliefs. Firstly, he prayed, that appropriate orders be passed "rescinding/disclaiming the company's interest in the lease of the demised premises" and that vacant possession of the said premises be handed over to him. Secondly, that the company be directed to pay to him a sum of Rs. 46,575, being the arrears of rent accrued due after April 15, 1977, that is, the date of the winding-up order. It was mentioned in the application that a sum of Rs. 4,050 was also due to him on account of arrears of rent for the period from October 22, 1976, till the making of the winding-up order, but no relief was sought in respect of that sum as a claim for the same had already been filed with the official liquidator. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ". The object of the winding-up provisions, as Lindley L.J. explained in Oak Pits Colliery Co., In re [1882] 21 Ch D 322, "is to put all unsecured creditors upon an equality, and to pay them pari passu". Hence, unless the landlord is able to show some other provision in the Companies Act under which he is entitled to be paid in full, his application must fail. Section 530 of the Companies Act deals with "preferential payments". Sub-section (1) sets out the debts which are to "be paid in priority to all other debts". There are many other sub-sections, but for the present purpose, only sub-section (6) is relevant. It says: "Subject to the retention of such sums as may be necessary for the costs and expenses of the winding-up, the foregoing debts shall be discharged forthwith so far as the assets are sufficient to meet them..". It is apparent from this sub-section that "the costs and expenses of the winding up" get precedence even over the debts to which priority is given by sub-section (1). The reason, of course, is that it is only the net assets which are distributable. The landlord, here, contends that the arrears of rent accrued due, after the winding-up order was made, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the commencement of the winding-up. In reaching this conclusion, Lindley L.J., who delivered the judgment of the court, said (at page 330): "When the liquidator retains the property for the purpose of advantageously disposing of it, or when he continues to use it, the rent of it ought to be regarded as a debt contracted for the purpose of winding up the company, and ought to be paid in full like any other debt or expense properly incurred by the liquidator for the same purpose, and in such a case it appears to us that the rent for the whole period during which the property is so retained or used ought to be paid in full without reference to the amount which could be realised by a distress. This was the view taken by Lord Justice James in the case of Lundy Granite Co., hire [1871] LR 6 Ch App 462 and by Mr. Justice Fry in In re Brown, Bayley Dixon [1881] 18 Ch D 649, and by Mr. Justice Kay in the present case. But no authority has yet gone the length of deciding that a landlord is entitled to distrain for or be paid in full rent accruing since the commencement of the winding-up, where the liquidator has done nothing except abstaining from trying to get rid of the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rent or payment may prove for a proportionate part thereof up to the date of winding-up order or resolution as if the rent or payment accrued due from day-to-day : Provided that where the liquidator remains in occupation of the premises demised to a company which is being wound up, nothing herein contained shall prejudice or effect the right of the landlord of such premises to claim payment by the company, or the liquidator, of rent during the period of the company's or liquidator's occupation". According to counsel for the landlord, the meaning of the proviso to this rule is that the landlord is entitled to payment in full of rent accrued due after the commencement of winding-up if the liquidator "remains in occupation of the premises demised to a company", and nothing more is necessary to be shown. He relied for this submission on Rameshwar Nath v. U.P. Union Bank Ltd. [1956] 26 Comp. Cas. 332; AIR 1956 All 586. That case certainly supports him. It was concerned with the interpretation of rule 97 of the Company Rules made by the Allahabad High Court under the Indian Companies Act of 1913. That rule was verbatim the same as rule 157 of the Companies (Court) Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g was not assailed, the Supreme Court held (at page 119 of 30 Comp. Cas. and at page 334 of AIR 1960 SC) : "The property not having remained with the liquidators for the purpose of liquidation, unless the court passes an order holding that the debt incurred was part of the costs and expenses of liquidation, the rent accruing due since the date of the winding-up cannot be claimed in priority over other ordinary debts". To my mind, the judgment of the Supreme Court is conclusive against the contention of counsel for the landlord. The only other authority on which counsel for the landlord relied was Sarode Vithoba v. Madanlal Lalchand and Co., AIR 1955 Mys 29. In that case, while an insolvency petition was pending, an interim receiver was directed by the court to take charge of the properties of the debtor. Some machinery belonging to the debtor was kept in a rented house, and in pursuance of that order, the interim receiver locked and sealed the premises. An order of adjudication was made some time later, and, thereafter, the machinery was sold. It was held that the rent of the premises, which accrued both before and after the order of adjudication, could be treated as "exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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